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The impact of public employment on private sector activity: Evidence from Berlin

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  • Faggio, G.
  • Schluter, T.
  • vom Berge, P.

Abstract

We use the move of the seat of the German government from Bonn to Berlin in 1999 to test competing views about the impact of public employment on private sector activity in a local labor market. Using employment data from a 50% sample of establishments across 190 Berlin postcodes, we apply a treatment intensity approach which takes the possibility of spillovers into account. Results indicate that the arrival of 100 public sector jobs into an area generates 55 additional jobs in the private sector. There is evidence of spillovers: relocations up to a distance of 1km from a postcode boundary increases employment in the private sector by 36 jobs. These effects are coming through job gains in the service sector, while manufacturing employment is not influenced by the relocation.

Suggested Citation

  • Faggio, G. & Schluter, T. & vom Berge, P., 2016. "The impact of public employment on private sector activity: Evidence from Berlin," Working Papers 16/11, Department of Economics, City University London.
    • Handle: RePEc:cty:dpaper:16/11
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    File URL: https://openaccess.city.ac.uk/id/eprint/16511/1/Faggio%20-%20Economics-DP-16-11.pdf
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    References listed on IDEAS

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    Cited by:

    1. Xenia Frei & Remo Nitschke, 2022. "Erfahrungen aus Behördenansiedlungen in strukturschwachen Regionen," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 29(03), pages 03-07, June.
    2. Xenia Frei & Marcel Thum, 2019. "Behördenverlagerungen verändern die Arbeitsmarktstruktur," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 26(03), pages 06-08, June.

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